Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
==========================================================================================================================================

Last night, Barach Obama spoke to America, in a courageous and far-seeing speech that established him among the greatest of American presidents. Here is the complete text:

My fellow Americans,

I come to you with and apology and a promise. You have been lied to – by Congress, by the media, and yes, by me. From some, the lie was due to ignorance. From others, the lie was intentional. Either way, you have been misled, and for that I truly am sorry.

You have been told the federal debt is too high, that it is a danger to our economy, that our children and grandchildren will be forced to repay it. You have been shown debt clocks that purport to demonstrate how much of the federal debt you owe.

All lies.

On August 15, 1971, the U.S. became Monetarily Sovereign. Unlike our states, counties and cities, the federal government acquired total sovereignty over our sovereign currency, the dollar.

In simple English, this meant we could create dollars at will. The government no longer needed to ask anyone for dollars – not you, not me not China – though unaccountably it continues to beg for the dollars it freely can create.

We continue to pretend that federal financing is like our own personal, kitchen-table financing, so we use phrases like “live within our means,” and “unsustainable debt,” which may be appropriate to you and me, but no longer are appropriate to the federal government.

Unlike you and me, U.S. government never can run short of dollars, never can go bankrupt, never can be unable to pay any bill. In short, the so-called “debt crisis” is an accounting myth.

And today, I’m going to prove it to you.

I am holding in my hand a genuine U.S. coin, made of platinum.[Holds up coin]

Look at it closely. It’s denomination is $20 trillion.

[Turns to Ben Bernanke]I am giving this coin to Chairman Ben Bernanke, along with a deposit slip, and asking him to deposit this coin into the appropriate account at the Federal Reserve Bank, to offset the accounting debt.

[Turns back to the camera] There, it is done. Today, the so-called federal debt was $12 trillion. Tomorrow, when you awaken, the federal debt will be zero.

Those debt clocks will have to be rewound to zero. The annual fight over the debt limit will become a distant and unpleasant memory. The accounting myth known as the “federal debt” will be undone by the reality of the $20 trillion platinum coin.

Given this new-found reality, we will act slowly, carefully and prudently. First, I can tell you there will be no tax increases of any kind, not on the rich and not on the poor. This should greatly please my friends on the other side of the aisle.

Then, we will eliminate FICA, the single worst, most unfair, most unnecessary tax ever devised, as it punishes the salaried people, especially at the lowest end, and it punishes companies. It exacerbates unemployment. It fosters recessions.

Again, still moving at a measured pace, we will begin to improve Social Security, by returning the starting age to 65, with a longer term goal of 62, and we will devise ways to increase benefits so that our elderly can actually live on what they receive.

Additionally, our target will be to provide Medicare – free Medicare – to every man, woman and child in American. This will eliminate the need for Medicaid – everyone will be covered by Medicare – and the associate costs to our financially overburden states.

This will not happen tomorrow. It will be done, careful step by careful step, so as never to shock the economy with too many changes at once.

Some of our other targets are to cut unemployment, provide long-term nursing care for everyone, a free college education for all who want it, a salary for attending school, the end to corporate taxes, the reduction in income taxes by annually raising the standard deduction, and many other initiatives that will benefit America.

We will go again to the moon and on to Mars and beyond. We will build the greatest, most advanced civilization the world has ever known, and we will carry the rest of mankind along with us.

For those who hear this and worry about inflation, I give you this solemn promise: Preventing inflation always will be top of mind. That is why we will move carefully. So in addition to giving Chairman Bernanke that $20 trillion platinum coin [Aside: “Please don’t lose it.”], I give him this instruction:

[Turns again to Bernanke] Henceforth, your primary obligation will be the maintenance of inflation at your target rate of 2%. You will have no need to stimulate the economy – a task that sometimes can conflict with inflation prevention. Stimulating the economy will be Congress’s and the President’s job. You will focus on preventing inflation, and you have the tools to do it.

In the unlikely event, it ever should happen that you find yourself losing ground to inflation, and despite your best efforts, inflation were to rise, we will back off on our plans, catch our breath, and await the next opportunity.

But until that happens, we have the power and we judiciously will use it, to bring America back to the healthiest, wealthiest, best educated nation on earth, where poverty and disease and homelessness and hopelessness have all but disappeared and every American adult and every American child lives the American dream.

That is our goal. That is our vision. And together, we can, we will accomplish it.

Sleep well tonight, my fellow Americans, and when you awaken, let us begin this dramatic new journey, together. You will be remembered as the generation that began it all.

If the dollars created through coin seignorage are used to retire the debt, that money has already been spent by the Federal Government years ago. Any inflationary effect already happened when Congress appropriated the money and it was spent by the government.

Same thing with the trust funds and other accounts showing a deficit. That money has already been spent and pumped into the economy. The “inflation”, if there was any, already happened in the past. All the coin seignorage method does is remove it as an account deficit by creating a profit through printing the coin. Coin seignorage replaces an artificial deficit with an equal artificial profit (if you will) to wipe out an unnecessary, inappropriate (for the Federal Government) accounting artifact, which is what the “Federal Deficit” is in the first place.

AH, IF IT WERE ONLY TRUE.
Yes,but please explain why the $20 trillion would not as an unintended consequence go to farther the inequality gap by eventually going 100% to the top 10% ?
Isn’t it correct that 100% of all the gain since 1976 has gone to the top 10%.http://rwer.wordpress.com/2012/12/19/in-the-usa-when-income-grows-who-gains-1976-2008-chart/
“That’s right: 100 percent to the top 10 percent and zero for everyone else.”
Please explain to everyone how the solution of the Fed being made to work FOR the people instead of PFPB would not end federal income taxes, increase jobs and produce prosperity for all?
Read more: “Noble Prize/2013 Obama and Bernanke”
If not for your sake, than for your children or children’s children improve
the concept and use it as your guide.
“Justaluckyfool”

justaluckyfool asks, “Please explain why the $20 trillion would not as an unintended consequence go to farther the inequality gap by eventually going 100% to the top 10%?”

My response: In Rodger’s imaginary scenario, the $20 trillion would be used to pay off the “national debt” — i.e. pay the principle plus interest on T-securities. Since the holders of T-securities tend to be upper-income folks, then yes, much of that money would end up with the rich. However this will happen with or without a $20 trillion coin. The principle plus interest on T-securities will be paid anyway. Nonetheless, the platinum coin would banish the bogeyman of “national debt” – a false bogeyman that is used to cut social programs.

Why should the coin be platinum? Why not iron? Or a paper coin? Why have a coin at all? Reason: the average person falsely thinks that money is physical. Therefore the average person expects props. With a platinum coin, we would be using a coin charade to wean people off the debt charade.

Meanwhile in Rodger’s imaginary scenario, the FICA tax will be eliminated, jobs will be created, health care will be free for all, and so on. I don’t care if the rich become even richer, so long as average people can live decent, dignified lives.

The only difference I have with Rodger is that in his imaginary scenario, I would move quicker and bolder than he suggests. Rodger writes, “We will act slowly, carefully and prudently… moving at a measured pace… careful step by careful step, so as never to shock the economy with too many changes at once…”

I might say that to the public, but I would move quickly behind the scenes, because any delay will allow the public to go back to sleep, and the rich to resume their tyranny. Rather that move the slaves out of the dungeon step by step, I would rig the walls of the dungeon with explosive charges, so the walls suddenly crumble.

On the other hand, maybe we wouldn’t want to do any of this. Maybe we would cause new problems. Most people are not happy unless they are miserable. Most people use their slavery as a security blanket. Most people would feel sad if those debt clocks were set to zero. Most people crave personal and national crises. Most people need something to whine about, and will create it if it doesn’t exist. Most people would rather be “right” than be prosperous. Most people defend the social order that impoverishes them.

In short, the desire to get the word out about Monetary Sovereignty could be a foolish battle against human nature. Still, if we thought that way about everything, then we would never have any advances in science.

Just FYO, the coin has to be platinum because for some strange reason, there is a law on the books that specifically allows the Treasury to mint platinum coins — not gold, silver or wood — of any value it chooses. Not sure why platinum was specified, but that’s the law.

RMM, Quote Mark, ” My response: In Rodger’s imaginary scenario, the $20 trillion would be used to pay off the “national debt” — i.e. pay the principle plus interest on T-securities.”
If so, why the coin ?
The Fed can do that at will with the clicks of the computers?
Why then would they appropriate from the society a new $20 trillion
which would be redeemable “by the good faith and credit of the Sovereignty”, a $20 trillion more that will go to the top 10%.
If that statement re “gain since 1976 has gone 100% to the top 10%” is true?
So again I ask, “Why not purchase assets such as interest producing loans ?
The magic “QE COIN”. The proceeds would reduce federal income taxes to zero, end FICA, and earn you a Noble Prize in Economics and even upon more issuance end poverty, create prosperity.
Yes, this one simple scheme could do all that. BUT
what makes anyone think that the PFPB (Private For Profit Banks) would allow anyone to take that profit which they now make away from them.
Please show me where I error:
BERNANKE has proven QE can be for any amount for any period of time!
WE NEED ONLY TO CHANGE WHO WILL BENEFIT FROM QE.

Rodger, you are correct. I forgot about that law. Platinum coin seignorage is not merely a formality, since the government can only issue money in accordance with its own laws.

Under U.S. law, the President and / or Treasury Secretary can use a platinum coin to issue any amount of money without the consent of Congress.

The U.S. Code consists of “positive statutory laws” (i.e. permanent laws) passed by Congress. It contains 51 titles, plus 4 proposed titles. The current edition, published in 2006, is over 200,000 pages long, and contains all general federal laws currently in effect. (I say “general laws,” because each federal agency also has its own sub-laws.)

Title 31 of the U.S. Code outlines the role of the money and finance.

31 USC § 5112 (k) says, “The (Treasury) Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

According to 31 USC § 5112 (k), the Treasury Secretary can issue a platinum coin at whatever denomination he chooses, any time he chooses. Since the Treasury is part of the Executive Branch, the Secretary would have to consult the President, but not the U.S. Congress.

Voila: the national debt is paid off. The only partly that could squawk about this would be Congress, which would have to repeal its own law. But repealing a law is different from a retroactive (ex post facto) law, which is prohibited by Article I, Section 9, clause 3 of the U.S. Constitution: “No bill of attainder or ex post facto law shall be passed.”

Then again, the Constitution means little these days. A bill of attainder is a law by which
a person is immediately convicted without trial. The U.S. government convicts and sentences people all the time with drone strikes. So if bankers and Wall Street squawked about the Treasury Secretary issuing a $20 trillion coin, then the bankers and Wall Street would probably be able to stop it.

Why? Because of the smug, stubborn self-righteous stupidity of the public.

P.S. The federal “deficit”, “debt ceiling” would no longer be “the wrong word(s)” as using the “justaluckyfool (Soddy) method of loans issued with an interest attachment creates SOVEREIGNTY ASSETS. Is there anyone that would complain about too many assets, or demand a ceiling that it is ” too much for our future children”?

“The effort to balance the books that’s at the heart of the fiscal cliff is simply misguided. Instead of butting heads over whose taxes to raise and which programs to cut, lawmakers should be haggling over how to use the tool of a federal deficit to boost incomes, employment and growth. That’s the balancing act we need.”Op-Ed
Forget the ‘fiscal cliff’ by
Stephanie Kelton is an associate professor of economics at the University of Missouri-Kansas City and the founder and editor of New Economic Perspectives. @deficitowl

Just as the Holy Roman Catholic Church suppressed science and Truth to maintain their position as the Vatican-center of the universe, today the powerful will do all they can to keep everyone in the Dark Ages of pre-1971 thinking. These people are just as self-centered and selfish as the old religious types who still walk among us. They fear letting the Sovereign cat out of the bag, losing their power, control and status. They want nothing to do with universal equality or improvement other than lip service on Sunday.

The long arc of truth favors freedom and equality; trying to stop it will be suicidal. Those of us who are youthful and truthful will lead the way. In the final analysis only integrity will count. Fight the good fight.

tetrahedron720 writes: “Just as the Holy Roman Catholic Church suppressed science and Truth to maintain their position as the Vatican-center of the universe, today the powerful will do all they can to keep everyone in the Dark Ages of pre-1971 thinking…”

Yes, but the lies are maintained by people at all socioeconomic levels.

Galileo, for example, was initially opposed not so much by the Church, as by his fellow academicians at the University of Padua and elsewhere, whose power and careers depended on then-popular dogma. I would explain the details, but my comment would be too long. My point is that tyrants only hold power as long as regular people believe the tyrants should, and participate in that power, in their own respective ways. Regular people grumble, but they don’t oppose the tyrants. For example, average Americans grumble about politicians, but they mindlessly reject the facts about Monetary Sovereignty.

So we must somehow figure out ways to reach these average people. The MMT people can’t do it. MMT people live in a bubble, obsessively jabbering about problematic notions such as a hypothetical “jobs guarantee.” They fancy themselves “above” everyone else. Hence they claim that politicians and the 1% simply “misunderstand” money.

We must figure out ways to reach average people. That’s where the problem is.

I had thought Joe Firestone was the main driver of the Platinum Coin Solution.

My opinion, the main battle actually is economic, but not in the way you may think. The leaders of this country are well aware of the Platinum Coin Solution. They are well aware of Monetary Sovereignty. And though the public is ignorant and loath to change, the reason is the leaders have kept them there.

In truth, the main battle is motivational. The leaders are employed by the upper .1% income group to spread the myth that the deficit must be reduced. Why? Because virtually all deficit reduction plans have a greater impact on the 99.9% than on the .1%.

The goal is to increase the gap. The .1% do not care about absolute dollars; they compare about relative dollars. Having $1 million means little, if everyone has $1 million. But having $1 million means much if the rest of the world has $1 thousand.

The entire “cut the debt,” “cut the deficit” movement is based on the “increase the gap” mentality of the very rich. They bribe the politicians via campaign contributions and they bribe the media via ownership and advertising.

The solution is not just education, but rather education + motivation. We not only have to tell people the truth, but tell them who is hiding the truth and why. We have to make the people angry.

Good, though nothing will happen until people get angry. To the uninitiated, the Platinum Coin Solution sounds like some sort of “gimmick,” in essence, cheating that doesn’t solve the “real” problem.

People think the real problem is the debt is too big. That is not the real problem or even the phony problem. The real problem is that the upper .1% wants the public to think the debt is too big, so that all sorts of schemes to reduce the deficit will be accepted — endorsed, even — by the public.

Cutting the deficit (aka “austerrity”) always punishes the 99.9% and widens the gap between rich and poor, which is the primary goal of the rich.

So while the PCS is a great solution, it needs to be put into context for the public.

It’s a great solution because it eliminates the .1%’s power to cut Medicare, cut Medicaid, cut unemployment compensation, Cut Social Security, cut food stamps, cut aid to the poor, cut food and drug inspections, cut supervision of the financial industry, cut aid to education and cut the thousands of other benefits to the 99.9% provided by the government.

Obama has been bribed by campaign contributions, which is why he pretends not to understand.

Without context, no one gets angry, and the whole thing sounds like a hairbrained idea.

I agree with you, but there are two types of public anger. One is productive. The other is counterproductive.

We see the counterproductive kind in Liberals and Occupy types. They want to tax and punish the rich. They say the rich have it all sewn up. They say life is hopeless. They whine and moan, but they use their misery as a security blanket. Thus, they remain slaves.

This is the most common type of public anger. It is based on resentment. The rich encourage it, since it keeps the masses impoverished.

The other type of anger is far more powerful. The rich fear it. It arises when the public realizes that prosperity is right in front of their noses. Prosperity is within their grasp, here and now, and only the rich stand in their way.

When masses feel this way, the masses sweep the rich aside.

Let me illustrate:

SCENARIO #`1: The public has always starved, and is accustomed to famine. The masses figure, “That’s just the way life is.” Hence they submit.

SCENARIO #`2: The masses see that the granaries are full, and the guards are weak. They realize that getting the food is just a matter of crashing the gates.

The mob scene of Scenario #2 is much more powerful than the stoic, resigned futility of Scenario #1.

Therefore, my hope is that if enough people understand Monetary Sovereignty, then they will see that prosperity is available for all. The granaries are full. The rich are not smarter. The rich are not better at all. The rich are parasites that must be squashed.

Scenario 3: The public sees the grainaries are full for some, but since they are starving and always have been, they figure it’s just them, and the rich deserve to be rich because they earned it.
We have Scenario 3 now. Ugh.

And someone must step up and show the connection between the recession and the rich. The people must see that the President, Congress, the media and the mainstream economists all are owned by the rich, and all the great mass of misinformation is subsidized by the rich, to steal from the rest.

Sadly, MMT naively feels that education alone will do it. But the public does not want to be educated. The public wants someone to solve the problem.

So ,the public blames itself, or blames inevitable circumstance — and believes the nonsense that the politicians are working on the public’s behalf.

To succeed, MMT must give the public anger and a target for their anger.

Help: (1). What is the difference between
(a) the coin, and (b) the keystroke ?
Keystroke seems to have a cost advantage, it is practically a zero cost item that does the same job.
If both (a) and (b) are equal in results produced then either would produce the same results.
(2). Would either $20 trillion issued by coin or keystroke increase the dollar amount of currency that would be counted as “redeemable by the good faith and credit of the Sovereignty” ?
(2a) What is that “incomprehensible amount” as stated by the Sect of Treas. that redemption “would cause systemic failure”.?

It ought to be noted that the trillion dollar coin (or more) won’t cause inflation directly if applied to the debt. That alone is just an accounting trick. The problem is that banks, like nature, abhor a vacuum, and they would quickly rush to fill it with huge new debt. It would just be too tempting, and than we would be in a new debt-cycle, barely out of the old one. After all, if it’s that easy to cure the debt, than why not take on some more. THAT, and not the payment itself, would create inflation. That is, the new money, created out of nothing, that the banks would spew out in geyser-like fashion.

Rodger,
That was a really great Obama speech! Wouldn’t it be wonderful if we actually had a government that served the interests of the people rather than what we actually have: a plutocracy that rules the government. CH Douglas, whose social credit monetary analysis and reform proposals were gaining favor during the Depression, ran up against the money power. In his 1935 speech to the King and government of Norway titled, “Money and the Price System”, Douglas included this caution:

“It (*i.e. the money system) has, as you might say, first the technical side where you have a system which is operating badly and which under present conditions must continue to operate even worse; and, secondly, you have an enormous vested interest possessing the most powerful monopoly that the whole history of the world has ever known, the monopoly, as we call it, of credit, the monopoly of the creation of and dealing in money, a monopoly against which any other monopoly pales into insignificance–and it is determined to use every weapon to retain this monopoly.

In the modern world it is possible to do without almost any material thing. …but it is practically impossible for any of us to go through 24 hours without either money or the “credit” which attaches to the belief that we shall have money available sooner or later. The monopoly of the control of the money system is the great over-riding monopoly of the world as it is worked at the present time. And if you realise–as you will realise in dealing with the problem–that it has not merely an economic or mathematical side, but also a side which penetrates into the very highest politics, I will at once leave that political side, to which, however, I merely wanted to refer.”

MMT and PPCS offer “technical” solutions to our current monetary woes. But the technical solutions have been understood for centuries already (e.g. early American scrip currencies), and the source of the problem known at the highest levels (e.g. Thomas Jefferson’s warning about allowing banks to gain control of the money issuing power). Lincoln exercised the government’s money issuing authority and was shot and overruled. The banks’ privilege of creating our money was formally authorized by the 1913 legislation, just in time to finance the largest financial undertaking the world had known to that time: WWI. The 1920s credit bubble and 1929 Crash and Depression consolidated the money power even further.

Like Neo was warned about going up against the “agents” in The Matrix, everybody who has ever gone up against the money power has lost (except Andrew Jackson, who died happy that he had “killed the bank” (Second Bank of the United States, owned by “European financial interests” = Rothschilds). But the bankers enjoy the patience of centuries and they won in the long run. Rule by money is of Biblical proportions,

“For our struggle is not against flesh and blood, but against the rulers, against the authorities, against the powers of this dark world and against the spiritual forces of evil in the heavenly realms.” (Paul’s letter to the Ephesians 6:12)

In Revelation 13:4 John asks, “Who is like unto the beast? Who can make war against him?”

That’s what CH Douglas ran into when his monetary reforms were gaining traction. I can only imagine the dark intimations Obama is hearing against PPCS, from the same rulers.

Here’s what I still don’t understand. Why do we have such gutless politicians and leaders? I mean, can you imagine Jefferson, Jackson, Lincoln, FDR (in a wheelchair! He “welcomed their hatred”!), even Kennedy, genuflecting the way Obama has, to the Money Power? No one gets to live forever, and many presidents have seen personal danger in their lives…except, maybe the current generation. Maybe that’s it. Maybe we’re just too spoiled to fight?

That is why my argument with MMT is their refusal to broadcast the motivation and the power of the .1%. They have the academic’s belief that if you merely tell the truth and educate, you can change the world.

But omitting motivation and power, leaves them crying in the wind. I spoke to one of their more brilliant writers about this, and he said he couldn’t do it, and there wasn’t absolute proof, but he would have no objection if I did it.

They wish to use logic and fact to convince the .1% that really, it would be better for the world, if the income gap were not so big.

As you have noted, the MMT people refuse to address the political motives of the 1% and their puppet politicians.

I say it is worse than that. I say that the MMT clowns live in a bubble, not only in what they write, but how they write. They obsess over hypothetical fancies such as their “jobs guarantee,” and they revel in writing poorly. Hoping to seem “academic,” they are verbose, difficult to follow, and downright boring. (That’s why they have a very small audience.)

I regard their academic-style weaseling as childish. Contrast their tripe with your own blog posts, which have clarity, logic, and succinctness. You present your thesis at the beginning, then you flesh it in, and then you recap it at the end, boiling each concept down to its essence, so the reader can easily and quickly grasp it. Each sentence is woven into the sentence before and after it, such that each of your blog posts has the cohesion of a knitted sweater, so to speak.

Your writing is vastly superior to the MMT gibberish. I just saw an MMT-relevant blog post at Naked Capitalism that was reprinted from the NEP blog. Not only is the MMT blog post atrociously composed, it includes limp concepts like this…

“Budget deficits are ALMOST de facto desirable…budget deficits are FOR THE MOST part a critical, positive driving force in the world economy…” (Emphasis mine.)

There’s that MMT weaseling again. Deficits are almost desirable? Excuse me, but deficits are mandatory, if a nation is to have any economy at all. And if budget deficits are “for the most part positive,” then what parts are negative?

The MMT clowns get stupid notions in their heads, and they cling to them absolutely. For example, they still have racist ideas about Zimbabwe, despite my careful explanation of the facts. They are as rigid and dense as are people who dismiss MMT and MS altogether.

Bottom line: the MMT morons do not care about austerity. They only care about playing verbal parlor games.

Yeah, I have to agree with that too, though, to be fair, there are a lot of untrained people taking up the MMT mantle, and there is only one Monetary Sovereigntist, our own Rodger Mitchell. Dilution to the masses is the enemy of clarity.
Still, it is also true that MMT has some major flaws, while also being major right in other respects.